-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NvQPLzH6gq/jA8U5E0APL5YC5SyDLPGvslRu4AbuxupMRzK/CYVnQ+LcVZNqShpg pXUWfUUxp1dh8BNMl1E+MQ== 0000024104-96-000008.txt : 19961028 0000024104-96-000008.hdr.sgml : 19961028 ACCESSION NUMBER: 0000024104-96-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960928 FILED AS OF DATE: 19961025 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONTINENTAL MATERIALS CORP CENTRAL INDEX KEY: 0000024104 STANDARD INDUSTRIAL CLASSIFICATION: AIR COND & WARM AIR HEATING EQUIP & COMM & INDL REFRIG EQUIP [3585] IRS NUMBER: 362274391 STATE OF INCORPORATION: DE FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03834 FILM NUMBER: 96647935 BUSINESS ADDRESS: STREET 1: 225 WEST WACKER STREET 2: SUITE 1800 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3126617200 MAIL ADDRESS: STREET 1: 225 WEST WACKER STREET 2: SUITE 1800 CITY: CHICAGO STATE: IL ZIP: 60606 FORMER COMPANY: FORMER CONFORMED NAME: CONTINENTAL URANIUM INC DATE OF NAME CHANGE: 19660830 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ending September 28, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File number 1-3834 CONTINENTAL MATERIALS CORPORATION (Exact name of registrant as specified in its charter) Delaware 36-2274391 (State or other jurisdiction (I.R.S. Employer of Identification No.) incorporation or organization) 225 West Wacker Drive, Chicago, Illinois 60606 (Address of principal executive office) (Zip Code) (312) 541-7200 (Registrant's telephone number, including area code) (Former name, former address and former year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Number of common shares outstanding at October 25, 1996 1,103,211 PART I - FINANCIAL INFORMATION Item 1. Financial Statements CONTINENTAL MATERIALS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS SEPTEMBER 28, 1996 and DECEMBER 30, 1995 (Unaudited) (000's omitted except share data)
SEPTEMBER 28, DECEMBER 30, 1996 1995 ASSETS Current assets: Cash and cash equivalents $ -- $ 1,074 Receivables, net 14,174 12,158 Inventories: Finished goods 8,284 8,038 Work in process 2,114 2,282 Raw materials and supplies 4,339 4,337 Prepaid expenses 2,988 2,206 -------- -------- Total current assets 31,899 30,095 -------- -------- Property, plant and equipment, net 14,694 14,613 Other assets: Investment in mining partnership 750 1,500 Other 838 1,015 -------- -------- $ 48,181 $ 47,223 ======== ======== LIABILITIES Current liabilities: Bank loan payable $ 900 $ 2,300 Current portion of long-term debt 1,000 1,011 Accounts payable and accrued expenses 12,287 11,443 Income taxes 501 31 -------- -------- Total current liabilities 14,688 14,785 -------- -------- Long-term debt 2,500 3,000 Deferred income taxes 2,157 2,157 SHAREHOLDERS' EQUITY Common shares, $0.50 par value; authorized 3,000,000; issued 1,326,588 663 663 Capital in excess of par value 3,484 3,484 Retained earnings 27,659 25,818 Treasury shares, 223,377, at cost (2,970) (2,684) -------- -------- 28,836 27,281 -------- -------- $ 48,181 $ 47,223 ======== ========
See accompanying notes 2 CONTINENTAL MATERIALS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE THREE MONTHS ENDED SEPTEMBER 28, 1996 AND SEPTEMBER 30, 1995 (Unaudited) (000's omitted except per share amounts)
SEPTEMBER 28, SEPTEMBER 30, 1996 1995 Net sales $ 21,718 $ 18,183 Costs and expenses: Cost of sales (exclusive of depreciation and depletion) 16,058 13,288 Depreciation and depletion 666 569 Selling and administrative 3,142 3,455 -------- -------- 19,866 17,312 -------- -------- Operating income 1,852 871 Interest (112) (215) Equity loss from mining partnership (350) (229) Other income 124 371 -------- -------- Income before income taxes 1,514 798 Provision for income taxes 464 303 -------- -------- Net income 1,050 495 Retained earnings, beginning of period 26,609 24,694 -------- -------- Retained earnings, end of period $ 27,659 $ 25,189 ======== ======== Net income per share $ .95 $ .44 ======== ======== Average shares outstanding 1,103 1,131 ======== ========
See accompanying notes 3 CONTINENTAL MATERIALS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS FOR THE NINE MONTHS ENDED SEPTEMBER 28, 1996 AND SEPTEMBER 30, 1995 (Unaudited) (000's omitted except per share amounts)
SEPTEMBER 28, SEPTEMBER 30, 1996 1995 Net sales $ 66,694 $ 53,729 Costs and expenses: Cost of sales (exclusive of depreciation and depletion) 50,387 41,995 Depreciation and depletion 1,995 1,750 Selling and administrative 9,924 9,639 -------- -------- 62,306 53,384 -------- -------- Operating income 4,388 345 Interest (441) (644) Equity loss from mining partnership (1,495) (345) Other income 337 728 -------- -------- Income before income taxes 2,789 84 Provision for income taxes 948 32 -------- -------- Net income 1,841 52 Retained earnings, beginning of period 25,818 25,137 -------- -------- Retained earnings, end of period $ 27,659 $ 25,189 ======== ======== Net income per share $ 1.66 $ .05 ======== ======== Average shares outstanding 1,106 1,131 ======== ========
See accompanying notes 4 CONTINENTAL MATERIALS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 28, 1996 AND SEPTEMBER 30, 1995 (Unaudited) (000's omitted)
SEPTEMBER SEPTEMBER 28, 1996 30, 1995 Net cash provided (used) by operating activities $ 3,878 $ (2,824) Investing activities: Capital expenditures (2,073) (2,209) Proceeds from sale of property and equipment 63 672 Investment in mining partnership (745) (746) Other -- (27) -------- -------- Net cash used in investing activities (2,755) (2,310) Financing activities: (Repayments) borrowings under revolving credit facility (1,400) 3,100 Long-term borrowings -- 500 Repayment of long-term debt (511) (710) Payment to acquire treasury stock (286) (126) -------- -------- Net cash (used) provided by financing activities (2,197) 2,764 Net decrease in cash and cash equivalents (1,074) (2,370) Cash and cash equivalents: Beginning of year 1,074 2,778 -------- -------- End of period $ -- $ 408 ======== ======== Supplemental disclosures of cash flow items: Cash paid during the nine months for: Interest $ 500 $ 633 Income taxes 490 179
See accompanying notes 5 CONTINENTAL MATERIALS CORPORATION SECURITIES AND EXCHANGE COMMISSION FORM 10-Q NOTES TO THE QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS QUARTER ENDED SEPTEMBER 28, 1996 (Unaudited) 1.The unaudited interim consolidated financial statements included herein are prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures normally accompanying the annual financial statements have been omitted. The interim financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's latest annual report on Form 10-K. In the opinion of management, the consolidated financial statements include all adjustments (none of which were other than normal recurring adjustments) necessary for a fair statement of the results for the interim periods. 2.The provision for income taxes is based upon the estimated effective tax rate for the year. This rate was revised during the quarter ended September 28, 1996. 3.Operating results for the first nine months of 1996 are not necessarily indicative of performance for the entire year. Historically, sales of construction materials are higher in the second and third quarters. Overall, sales of heating and air-conditioning products have not shown strong seasonal fluctuations in recent years although product mix has historically yielded higher gross profit margins in the fourth quarter. (See Note 11 of Notes to Consolidated Financial Statements in the Company's 1995 Annual Report.) 4.On October 21, 1996 the Company purchased the assets of Valco, Inc.'s (Valco's) Pueblo, Colorado ready-mix concrete and aggregates operation for approximately $5,300,000 in cash including $500,000 for a noncompetition agreement with Valco and one of its shareholders. Additionally, the Company entered into a long-term lease to mine aggregates from properties in Pueblo owned by Valco. These transactions will expand the area serviced by the Company's ready-mix and aggregates operations in central and southern Colorado as well as provide additional aggregate reserves. 5.Concurrent with the purchase, the Company signed an Amended and Restated Revolving Credit and Term Loan Agreement (the Agreement) with its existing lending banks. The new term loan of $8,500,000 was used to fund the Valco transaction and to refinance the $3,500,000 loan previously outstanding. The new term loan is payable in increasing semi-annual principal installments with final payment of all then unpaid principal on June 15, 2001. The loan bears interest at prime or an adjusted LIBOR rate. The Agreement also provides for a $13,500,000 line of credit through June 15, 1998. Other terms and conditions of the loan agreement are similar to the prior agreement. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation Financial Condition (See pages 2 and 5) Operations for the first nine months of 1996 provided $3,878,000 in cash compared to using $2,824,000 in 1995. Improved earnings accounted for approximately $1,789,000 of the difference. Additionally, cash flows improved due to a planned reduction in accounts payable and accruals in the prior year of over $3,000,000 compared to an increase of $1,300,000 in the current year. The current year growth in payables and accruals was the result of the increased level of business. The Company estimates that its short-term line of credit (of which $900,000 was outstanding at September 28, 1996) will be adequate to meet its cash requirements for the foreseeable future. See also the discussion of the line of credit in Note 5 of the accompanying Notes to the Quarterly Consolidated Financial Statements. Historically, the Company's borrowings against the short-term line peak during the second quarter and decline over the remainder of the year. Operations - Comparison of Quarter Ended September 28, 1996 to Quarter Ended September 30, 1995 (See page 3) Consolidated net sales increased $3,535,000 (19.4%) as both industry segments showed strong growth. Sales of the construction materials segment were up $2,344,000 (26.6%) as construction activity in the Colorado Springs, Colorado area increased from the prior year. Improved furnace sales at Williams Furnace, as well as several large fan coil contracts, lead to the $1,191,000 (12.8%) improvement in the heating and air-conditioning segment. Selling and administrative expenses decreased $313,000 (9.1%) while declining as a percentage of sales from 19.0% to 14.5%. The decrease is attributable to the inclusion of non-recurring litigation related costs and the accrual of compensation for the Company's former president in the prior year. Other income for the prior year includes a $300,000 gain on the sale of the Company's interest in Oracle Ridge surface rights to Union Copper, Inc., the majority partner of Oracle Ridge Mining Partners. 7 Operations - Comparison of Nine Months Ended September 28, 1996 to Nine Months Ended September 30, 1995 (See page 4) Net sales increased $12,965,000 (24.1%). The heating and air- conditioning segment reported an increase of $5,167,000 (16.8%) as sales rose at both Williams Furnace and Phoenix Manufacturing attributable to new customers and the reasons noted above. The increase in the construction materials segment, $7,798,000 (25.4%) was due to the reasons noted above. Consolidated cost of sales (exclusive of depreciation and depletion) as a percentage of sales improved from 78.2% to 75.5% due to higher sales volume and production levels combined with cost improvements at all locations. Selling and administrative expenses increased $285,000 (3.0%) while the percentage of sales declined from 17.9% to 14.9%. The dollar increase is attributable to the higher sales volume while the percentage decline is due to the fixed nature of many of the expenses. The equity loss from mining partnership includes a first quarter write-down in the carrying value of the investment of $628,000. The project remains shut down. The remaining value of $750,000 carried on the balance sheet is management's best estimate of the investment's current market value. Other income in the prior year included gains on the sale of Oracle Ridge surface rights and the sale of real property in Colorado Springs. Historically, the Company has experienced operating losses during the first quarter. The subsequent quarters have historically improved over the first quarter's operating results. This trend is expected to continue as sales of construction materials are generally higher in the second and third quarters while sales of heating and air-conditioning products, although not showing strong seasonality, experience product mix changes that yield higher gross profits in the fourth quarter. 8 PART II Other Information - Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 11: Computation of per share earnings Exhibit 27: Financial data schedule (b) Registrant filed no reports on Form 8-K during the quarter ended September 28, 1996. SIGNATURE Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CONTINENTAL MATERIALS CORPORATION Date: October 25, 1996 By: /S/ Joseph J. Sum ---------------------- ---------------------- Joseph J. Sum, Vice President and Chief Financial Officer 9 EX-11 2 Exhibit 11 Computation of Per Share Earnings For the three and nine months ended September 28, 1996 and September 30, 1995 (Unaudited) (000's omitted except per share amounts)
Three Months Ended Nine Months Ended ---------------------- --------------------- September September September September 28, 1996 30, 1995 28, 1996 30, 1995 ---------- ---------- ---------- ---------- Primary Earnings Per Share: Net Income $1,050 $ 495 $1,841 $ 52 Weighted Average Shares Outstanding: Common Shares 1,103 1,131 1,105 1,131 Common Stock Equivalents 16 0 10 0 ------ ------ ------ ------ 1,119 1,131 1,115 1,131 ====== ====== ====== ====== Primary Earnings Per Share $ .94 $ .44 $ 1.65 $ .05 ====== ====== ====== ====== Fully Diluted Earnings Per Share: Net Income $1,050 $ 495 $1,841 $ 52 ====== ====== ====== ====== Weighted Average Shares Outstanding: Common Shares 1,103 1,131 1,106 1,131 Common Stock Equivalents 18 0 18 0 ------ ------ ------ ------ Total 1,121 1,131 1,124 1,131 ====== ====== ====== ====== Fully Diluted Earnings Per Share $ .94 $ .44 $ 1.64 $ .05 ====== ====== ====== ======
Notes: Primary and fully diluted amounts are not reflected on the face of the Consolidated Statements of Operations and Retained Earnings because they differ from basic earnings per share by less than 3%. Therefore, basic earnings per share are presented on the face of the statements. EX-27 3
5 1,000 9-MOS DEC-28-1996 SEP-28-1996 0 0 14,174 0 14,737 31,899 14,694 0 48,181 14,688 0 0 0 663 28,173 48,181 66,694 66,694 50,387 62,306 1,158 0 441 2,789 948 1,841 0 0 0 1,841 1.66 1.66 Net of allowance for doubtful accounts Net of accumulated depreciation Exclusive of depreciation and depletion
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